1-Should players go into high debt to grow their fleet or keep it under control? And what is high level of debt, what is manageable debt. 2- Should loans be paid back early and take them out again or let them roll and keep getting more money (Seems to increase interest rate)

High Debt or No Debt

As long as you borrow money effectively i.e. Whatever you purchase with your loan makes more per week than what the repayment is, then borrowing has no real downsides. Sure it affects your overal profit, but you still make more money than if you didn't own those planes etc.

As for paying back loans early - there is no benefit to this that I can see. You still pay the full amount, so you dont save anything on interest.

1 - Debt is a matter of investment vs revenues. Personnally, I consider that 50% (loans + rentals) should never ever exceed this part of your daily (or rather, weekly) revenues.2 - Depending on you company, it might be usefull to reimburse some of your loans, just to be able to get new ones.

And, against what MossieNZ said, yes, it can be very usefull to repay loans... Calculation matter

Having played for a few weeks now and crunching the math, I have found the best approach is to lease aircraft with your capital. Where capital is low, then the next best option is to take out a loan with the minibank at 1% (have to wait until the rates fall back to 1%) and then lease aircraft. I use medium to long-haul routes only and I find that the repayment from net profits on a flight route after lease only is around 50%, while it gets a little higher when loan repayment also has to be made.

So why lease rather than own outright, well I can lease 4 of the same airplanes for the cost of buying one. That means I make 4 times the revenue in the same period. , then if you consider that half goes to lease payments, I actually make twice what I would pay for owning one plane. At the end of the lease, I get back my full deposit, while if I were to sell the plane at the end of the same period I would only get back around 80% of my investment. So all in all, leasing wins (and leasing is a form of debt financing so it counts to this thread.)

As for repaying loans early, it makes no sense, especially when you have gotten a loan at 1%. If you repay a loan early, you still pay the full amount as was alluded to earlier, so it is best to take any money you have made and reinvest it into the operation, ensuring that your structural profit is always better than your total loan repayments.

e.g. If you borrow 50 million @ 1%, you repay 50.5 million regardless of when you pay it back. So rather than repaying it all in one week and then having to borrow a second 50 million in the next week (meaning your total repayment will be 101 million, repay the 2.02 million due at the end of the first week and reinvest the other 48.48 million in the next week to do whatever it was you were going to use the new 50 million to do. At the end of the period you would have saved 500 thousand interest, which may seem small, but that has multiple effects based on the number of loans saved.

John E B Goode a écrit:Having played for a few weeks now and crunching the math, I have found the best approach is to lease aircraft with your capital. Where capital is low, then the next best option is to take out a loan with the minibank at 1% (have to wait until the rates fall back to 1%) and then lease aircraft. I use medium to long-haul routes only and I find that the repayment from net profits on a flight route after lease only is around 50%, while it gets a little higher when loan repayment also has to be made.

So why lease rather than own outright, well I can lease 4 of the same airplanes for the cost of buying one. That means I make 4 times the revenue in the same period. , then if you consider that half goes to lease payments, I actually make twice what I would pay for owning one plane. At the end of the lease, I get back my full deposit, while if I were to sell the plane at the end of the same period I would only get back around 80% of my investment. So all in all, leasing wins (and leasing is a form of debt financing so it counts to this thread.)

But you can't configure planes to best fit a route if you lease them and you can't carry cargo. 288/157/67 passengers in a A380 is not the best split.

That actually depends on the routes. You will need to make a lot of auditing to find a country, where the reconfiguration of a leased a/c works. For me leased a/c work perfectly on routes within the US (My hub is Honolulu) and / or France, for example. - Without the cargo portion, of course.The proportions of those routes in and between US and France is exactly the same as those all of the leased a/c come : Eco 57%, Bus 30% and 1st 13% - in respect of number of seats.

The proportions do not differ within a country. Even if the passenger demand differs between two destinations within the same country, the proportions will remain the same! So if you find a destination where the a.m. proportions fit, they will likely work on all other destinations within the same country as well. On the other hand - if the DON'T fit your proportions - lets say they have a higher amount of Bus and 1st - there is no need to audit other cities within the same country - simply won't get any better. This is important for scheduling your a/c, too. Works a lot better, if you group only countries with (almost) the same proportions...

So I use those leased ones on routes within US and to France while I buy a/c and reconfigure them as needed for all other routes.